Thread by @StableInvestor

Long Thread on F.I.R.E.
Financial Independence & Early Retirement

#financialindependence #financialfreedom #earlyretirement #financialplanning #retirementplanning

FIRE = Financial Independence Retire Early

Less than 1% people really understand the true meaning of financial independence. And even less than 1% (of that 1%) are capable of aspiring for it. And even less than 1% (of that 1% of that 1%) are capable of achieving it.

Most people won’t achieve it. And many more don’t believe its possible. It’s tough no doubt. How can something like this be easy? But that is the whole reason why most people don’t or won't achieve it. And they will continue to write it off.

It is achievable. But people, systems and society is designed to make you believe it's not. But it is achievable, though requires honest persistence.

Not having to worry about money is the best part about financial independence. It is actually very liberating and unburdening to feel that way.

You can do what you like. Really. And even better is the part about being able to completely avoid doing what you don’t like to do!

As Suze Orman once said - “A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.”

My view is that the best thing that enough money can get you is to give you back the ownership of your own time. You have been trading time for money. Reaching FI allows you to trade back money for time.

“I had a considerable passion to get rich, not because I wanted Ferraris but because I wanted independence. I desperately wanted it." - Charlie Munger said this. That’s how you should think about money. As a way to achieve independence. A means to an end. Not an end itself.

Your spouse will play a major role in your journey to Financial Independence. You both need to be in sync. And for couples not talking about money, it may not work smoothly.

Financial Independence doesn’t mean Early Retirement. Though it gives the option to do so.

I aim for early Financial Independence and not early retirement. And both are not the same. And I am not FI yet.

Financial independence is simply about having the option to not work for money as you have enough already for the rest of your life. It doesn’t mean that you shouldn’t work. You can just be choosy about how you wish to spend time.

Alternate meaning of F.I.R.E can be: FIRE = "Financially Independent REMAIN EMPLOYED". It is not necessary to retire after achieving FI.

Financial Independence Vs Early Retirement Vs Financial Freedom. Not sure about the difference?

Do read - stableinvestor.com/2018/09/differ…

High savings rate + Living below means are necessary conditions. What more? Some luck with the sequence of return risks.

If you spend to show off but don’t earn well accordingly, then you won’t achieve FI. Forget about it.

Don’t let your expenses keep up with income. Keep increasing that gap. And bigger the gap, better it is. In fact, this is the real SECRET of accelerating your financial independence plans.

Let’s say you start with 25X formula of financial independence (just assume). X is the annual expense. Now if the X (i.e. Annual Expense) is small, you can save more and, in turn, reach the target of 25X faster.

Strongly suggest reading: “The REAL SECRET of How to Accelerate your Financial Freedom?”

Here - stableinvestor.com/2018/11/financ…

Talking of role of expenses, one thing is clear - Normal living expenses are low. It’s just the show-off & lifestyle that makes it expensive. If you aim for FIRE, then you need to understand this really well. This is the key.

Read about this at - stableinvestor.com/2020/04/low-li…

You really should be clear about your expenses - from being a NEED vs. being a WANT. The more you showoff and convert WANTs to NEEDs, the more money you need for your FI.

Controlling expenses is fine. But there should be a limit to this. I don’t believe in living ultra-frugal penny-pinching life just to accelerate the achievement of FI. You need to enjoy the journey too.

People overrate How fast you are able to reach financial independence. And underrate How enjoyable your journey on way to financial independence is.

Thoughts on "Is going Very Fast in F.I.R.E really Good?"

Read - stableinvestor.com/2019/10/fire-f…

No point being the richest man in the graveyard and having lived frugally all your life.

Don’t kill yourself every day just to begin living after several years.

Financial Freedom is not a race. You don’t have to beat anybody. Set your own pace.

Something that a Chinese guy told me in Egypt. Something on lines of ‘Don’t postpone life for tomorrow’. This gives a different angle to this discussion.

Do read - stableinvestor.com/2017/02/advice…

Achieving FI gives you the power to say NO to most things you don’t like. And also gives you the superpower to use the F word. 👿👿

Not having enough money at the right time is what worries most people. And having FI liberates you from that cycle of worry.

Chase freedom that having-enough-money brings. Don’t chase money itself.

Everybody wants to go to heaven. But no one wants to die. Similarly, everybody wants financial freedom. But no one wants to save and put in the required efforts.

Be very careful of the attractive quotes on FI, financial freedom and early retirement on the internet. They are indeed motivational. But they hide the effort and persistence required to achieve it.

Don’t just be under the impression that a high rate of return on investment will help you. You also need to increase the quantum of savings substantially if you want to achieve FI early and on your terms. It's a non-negotiable.

Your FI corpus should be large enough so that you don’t run out of money before running out of years. And that is longevity risk for you to think about.

Read - stableinvestor.com/2017/06/longev…

How much should you save? You need to do maths and random figures like saving 10-15% of income won’t work. Do solid maths to find out. Or take professional help. Don’t go by random suggestions made by random people.

There is a reason why Retirement Planning has rightly been called as the NASTIEST PROBLEM in Finance. And so true for true financial independence.

Do read this article to know why - stableinvestor.com/2018/04/retire…

There is a big difference between taking FI in a Bull market Vs a Bear market. Very very very important to understand the difference if you don't want to derail your FI plans later on.

In fact, those aiming for FI should eventually build buffers for a few extra years to accommodate the risk of bad luck (or bad sequence of return risk - assuming you know what it is).

Even if you don’t want to retire early, you should still be prepared for some degree of Involuntary or Forced Early Retirement. Why? Because sh** happens in life when the powers above are not in your favor.

Read this - stableinvestor.com/2018/11/involu…

And to those who say money doesn’t buy happiness - True it doesn’t. But it does offer a level of freedom which is quite acceptable. And to be really practical, money is needed no matter what you me or anyone else has to say about it.

That reminds of a nice quote - "Money can’t buy happiness, but it will certainly get you a better class of memories.”

If you are yet to think about FI or FIRE or are just curious about it, then please do read - stableinvestor.com/2017/01/retiri…

The Impact of becoming financially free is not limited to personal finances alone. It can have a real positive impact on your relationships and health as well.

I leave you with a quote by Dave Ramsey - “If you will make the sacrifices now that most people aren’t willing to make, later on, you will be able to live as those folks will never be able to live.”

Also, if you can achieve FI (and it is really worth it), then good for you. But if you can’t, don't worry. Life is still good. Live on.

End.